Regional Port moves to formalize ownership of major improvements

WENATCHEE — The Chelan-Douglas Regional Port Authority is reviewing several major capital improvements after staff discovered that formal ownership allocations required under the agreement that created the regional Port had not been completed.

The oversight did not change how the projects were funded or which entity paid for them, but left formal ownership interests in several major improvements undocumented under the agreement that combined operations of the ports of Chelan and Douglas counties.

Although the two county port districts operate together through the Chelan-Douglas Regional Port Authority, the Port of Chelan County and Port of Douglas County remain separate legal entities. That distinction matters when property is purchased or improvements are made: depending on how a project is funded, each underlying port may hold a different ownership share.

CEO Jim Kuntz told commissioners Aug. 11 that the regional Port has routinely prepared allocation memos when purchasing property, documenting which entity owns it. Staff recently discovered the requirement goes further.

“That's on me, because we were focusing on when we buy property,” Kuntz said. “When we buy property, who owns it? That's not what this resolution says.”

Under the agreement, capital improvements of more than $1 million also require ownership allocations, with exceptions for certain airport improvements supporting commercial air service, including runways, taxiways, runway protection zones and terminal uses.

Kuntz said staff had become accustomed to treating property purchases as the point at which an allocation was required and did not consistently apply the same process to major improvements made to property already owned by one of the entities.

“We got in a lane here for buying property, to get that allocation memo going,” Kuntz said. “We forgot about [these] improvement[s]. We apologize. We'll get it corrected.”

Staff is now reviewing projects for which allocations should have been completed and plans to bring several resolutions at a time to commissioners over upcoming meetings.

The work is largely retrospective. Rather than changing who funded past projects, staff will use the funding already contributed to determine and formally record the resulting ownership shares.

Those calculations will not necessarily be the same for every project.

Kuntz said the regional Port has often used the relative tax contributions of the two districts, roughly 75% from Chelan County and 25% from Douglas County, when allocating jointly funded investments. But the actual percentages can vary by year, and projects involving grants, loans or property already owned by one district can require different treatment.

The Trades District illustrates the complexity. Staff said portions funded through grants are divided equally between the two ports, while debt assumed by the Port of Douglas County is credited entirely to Douglas County. Remaining contributions are allocated based on the relative tax proceeds received from the two districts during the project.

Final ownership percentages cannot always be established until construction is complete and the total amount contributed from each funding source is known.

Other projects identified for review include improvements within the Port's Olds Station properties, the Executive Flight building, the cooling water system, the Emerson facility and several Pangborn Memorial Airport projects outside the category of improvements automatically assigned to the regional authority.

The discussion prompted commissioners to ask how those ownership shares would matter if the two ports were ever separated and assets had to be divided. Kuntz emphasized that the review was not being driven by disagreement between the Chelan and Douglas boards.

“For people listening in, this regional Port is working very well at the high level,” Kuntz said. “There's no friction between the two boards here. This is all — it's just due diligence.”

Commissioners will ultimately approve the individual allocation memos as staff works through the outstanding projects.

Kuntz said the review will also change the process going forward, with major capital improvements receiving the same ownership review the Port has already been conducting when it purchases property.

“We've not been sitting on our laurels for the last several years,” Kuntz said. “We got in a lane here for buying property to get that allocation memo going. We forgot about this improvement.”

Staff expects to begin bringing the allocations back to the board over the next several meetings.

Andrew Simpson: 509-433-7626 or andrew@ward.media